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On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million

On January 1, 2020, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million cash and 500,000 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $16,970,000.

On January 1, JDE stock had a market value of $14.90 per share and there was no control premium in this transaction. Any consideration transferred over book value is assigned to goodwill. BMI had the following balances on January 1, 2020.

Book

Fair

Value

Value

Land

$1,700,000

$2,550,000

Buildings (seven-year remaining life)

2,700,000

3,400,000

Equipment (five-year remaining life)

**CALCULATE THE NCI**

The following account balances are for the year ending December 31, 2020 for both companies.

John Doe

Bubba

Enterprises

Manufacturing

Revenues

$(298,000,000)

$(103,750,000)

Expenses

271,000,000

95,800,000

Equity in income of Bubba Manufacturing

( 4,361,500)

0

Net income

$( 31,361,500)

$( 7,950,000)

Retained earnings, January 1, 2020

$( 2,500,000)

$( 100,000)

Net income (above)

( 31,361,500)

( 7,950,000)

Dividends paid

5,000,000

3,000,000

Retained earnings, December 31, 2020

$( 28,861,500)

$( 5,050,000)

Current Assets

$ 30,500,000

$ 20,800,000

Investment in Bubba Manufacturing

13,161,500

Land

1,500,000

1,700,000

Buildings

5,600,000

2,360,000

Equipment (net)

3,100,000

2,960,000

Total assets

$ 53,861,500

$ 27,820,000

Accounts payable

$( 3,100,000)

$ (4,900,000)

Notes payable

( 1,000,000)

Common stock

( 2,900,000)

( 6,000,000)

Additional paid-in capital

( 19,000,000)

( 10,870,000)

Retained earnings, Dec. 31, 2020 (above)

( 28,861,500)

( 5,050,000)

Total liabilities and stockholders equity

$ (53,861,500)

$( 27,820,000)

REQUIREMENT: FIND NCI

3,700,000

3,300,000

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